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That's not true. The company gets 10M. The shareholder still received nothing, and thus has no tax liability.

When the shareholder sells their shares they will be taxed.

I don't understand your scenario at all... :\

His scenario was the company raises at 10M and afterwards gives 1% of it's shares to the employee. Actually I think most countries would treat that as taxable income which is why companies usually give options not shares once they get going.

That is still not a taxable event. Even if it's shares and not options.

The shares won't be taxed until they are sold.

I know this, because I've worked in an Australian company and been given shares and they made no difference to my tax liability.

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